Postdoc Training Grant Income - Contribute to Solo 401k?

[docspouse88]

My spouse is a medical resident and currently doing a year of research.  During this year, she is not able to contribute to her employers 403b or 457b plan.  I am trying to determine if she could open up a solo 401k this year - does anyone have any insights or thoughts they'd be willing to share?  Below are some additional details:

- She is currently being paid by a T32 postdoctoral training grant and no taxes are being withheld from her pay

- The employers website indicates this is considered a "fellowship payment" by the IRS

- Here is a link to a blog post which discusses this type of income and tax requirements: http://www.gradstudentfinances.org/grad-student-tax-lie-2-you-received-a-1099-misc-you-are-self-employed/

Any feedback would be much appreciated!

[jfoxcpacfp]

As far as I can determine, this is considered a stipend and is not subject to FICA taxes. Assuming that is the case, your wife would not qualify to contribute to a SOLO-k.

otoh, if this happens to be a non-NRSA grant, then I believe she would be taxed for self-employment purposes and would be able to set up and contribute to a SOLO-k.

[Dreamgiver]

Don't know the answer to your questions, but if indeed this income is not taxed this year, I would consider converting her current assets to Roth ones during the current tax year. When you are given lemons, you make lemonade.